Vancouver’s once high-flying market for detached houses has hit turbulence as sales and prices decline, creating uncertainty for both buyers and sellers.
“Government policy measures combined together have had a powerful effect on the consumer psychologically,” Brad Henderson, president of Sotheby’s International Realty Canada, said in an interview. “Any additional policy tweaks to slow down the market would quite likely bring about the kind of thing that governments are trying to avoid, which is a harder landing rather than a softer one.”
The number of detached properties that sold for at least $1-million in the City of Vancouver dropped to 885 transactions in the first half, down 36 per cent from the same period last year, according to a new report by Sotheby’s on what it calls “top-tier” sales.
A separate analysis by real estate agent Steve Saretsky shows that the average price for all detached properties sold last month within Vancouver fell 4.6 per cent compared with June, 2017.
Sotheby’s said that for detached properties, condos and townhouses, the total number of $1-million-plus transactions in the first half in Vancouver reached 2,385, down 19 per cent compared with the same period last year.
Mr. Henderson said the city’s sales slump reflects the stalemate in the market, with buyers looking for deeper discounts and sellers reluctant to drop their prices enough to spur a transaction.
“Both sides are waiting to see if another shoe is going to drop,” either through further government measures or rising interest rates, he said.
The vast majority of detached houses within Vancouver still sell for $1-million or more, but average prices are decreasing. The price for all detached properties that sold last month in Vancouver averaged $2,550,708, down 4.6 per cent from $2,674,497 in June, 2017, according to data compiled by Mr. Saretsky.
Mr. Saretsky and Mr. Henderson say higher-end categories – notably properties above $5-million – have been hit the hardest, helping to drag down the average price within the city.
Regionally, with rising prices in several suburbs, the average price for detached homes has climbed slightly over the past year in Greater Vancouver.
B.C.’s NDP minority government introduced measures earlier this year designed to cool off the housing market, including new taxes on properties assessed at more than $3-million.
After prices surged during the boom from mid-2013 to mid-2016, the provincial government, then under the Liberals, introduced a tax on foreign buyers in the Vancouver region in August, 2016.
The foreign-buyers tax helped reduce prices temporarily, but the rally resumed in early 2017, with the average price for detached houses in the city reaching a near-record $3,080,563 in October, 2017.
The B.C. NDP government raised the foreign-buyers tax to 20 per cent from 15 per cent five months ago, while expanding that tax beyond the initial target of the Vancouver region.
Federally, Canada’s banking regulator implemented a stress test on Jan. 1, 2018, making it tougher for buyers to qualify for mortgages.
When looking at all housing types, the average price in the City of Vancouver last month fell to $1,310,225, down 3.4 per cent compared with a year earlier.
The price for condos sold last month in Vancouver averaged $857,503, down 0.3 per cent from June, 2017, while the price for townhouses averaged $1,162,466, for a 2-per-cent decrease over the past year.
With sales slumping year-over-year for all types of housing, prices could falter further for Vancouver condos and townhouses, Mr. Saretsky said.
Sotheby’s said sales of detached properties for at least $1-million in the City of Toronto also in the first half, with 2,240 transactions, down 39 per cent from the same period in 2017.
In the Greater Toronto Area for all housing types, a total of 7,684 properties in the first half sold for at least $1-million, down 46 per cent compared with the first six months of 2017.
But Bank of Montreal senior economist Robert Kavcic said he sees signs of a turnaround in the GTA, noting that total sales in the region last month rose 2.4 per cent compared with June, 2017.